How Is a Pension Calculated After Moving from Uzbekistan to Ukraine?
There are situations where a person is forced to change their place of residence for reasons beyond their control. Such a move can be particularly difficult for pensioners, especially where relocation to another country is involved. In these circumstances, international social security arrangements may play an important role in protecting pension rights acquired in different states.
The court case considered in this article concerned a woman who had been granted a pension in Uzbekistan in 2008 and subsequently moved to Ukraine. At the time relevant to the dispute, pension relations between the countries were governed, in particular, by the Agreement on Guarantees of the Rights of Citizens of the Member States of the Commonwealth of Independent States in the Field of Pension Provision of 13 March 1992.
The Agreement historically established a territorial model of pension provision under which pension rights could be determined according to the legislation of the pensioner’s new country of residence. Accordingly, after moving to Ukraine, the claimant applied to the Pension Fund of Ukraine in order to exercise her pension rights under Ukrainian legislation and the applicable international framework.
In 2014, after relocating to Ukraine, the woman applied to the relevant territorial body of the Pension Fund requesting that her pension be calculated taking into account the indicators applicable in Ukraine. The Pension Fund refused her request, which prompted her to challenge the decision before the administrative court.
The Pension Fund argued that the claimant had originally been granted a pension in Uzbekistan in 2008. In its view, there were no grounds for a new pension calculation because, after her arrival in Ukraine, the pension had not been granted again; rather, payment of the previously granted pension had merely been resumed.
The court disagreed with this interpretation. It concluded that, under the international pension rules applicable to the dispute, the amount of the pension had to be determined in accordance with the legislation of the contracting state in which the pensioner had established their new place of residence, subject to the conditions established by the relevant international agreement.
This distinction was crucial. If the pensioner’s application after moving to Ukraine was treated merely as a request to resume payment of the pension previously granted in Uzbekistan, the original calculation could effectively remain unchanged. If, however, the application was treated as an application for pension provision under Ukrainian legislation following the change of permanent residence, the indicators prescribed by Ukrainian pension legislation had to be applied.
For the purposes of calculating an old-age pension in Ukraine, one of the relevant indicators is the average salary (income) in Ukraine per insured person from which insurance contributions were paid. The applicable salary indicator is determined in accordance with the pension legislation in force for the relevant pension application.
The court took into account that payment of the claimant’s pension in Uzbekistan had been terminated at the end of 2013. After arriving in Ukraine, she applied to the Pension Fund in 2014 for an old-age pension.
Accordingly, the court concluded that the pension calculation had to be carried out on the basis of the rules applicable to her pension application in Ukraine rather than simply continuing the calculation previously used in Uzbekistan.
In the circumstances of that case, this meant applying the relevant Ukrainian average salary indicator for 2013, as the calendar year preceding the claimant’s application for pension provision in Ukraine in 2014.
The case illustrates an important distinction between resuming payment of an existing pension and determining pension entitlement after a person permanently relocates from another country to Ukraine. The legal consequences may differ significantly, including with respect to the salary indicators used to calculate the amount of the pension.
It is important to note that international pension arrangements involving Ukraine and former CIS states have changed significantly since the events considered in this case. Therefore, persons who currently move from Uzbekistan to Ukraine should not rely solely on the rules that applied to a pension dispute arising in 2014. The applicable international framework, the periods of employment involved, the date of relocation and the legislation in force at the time of the pension application should be assessed separately.
Thus, where a person previously received a pension in Uzbekistan and subsequently relocates to Ukraine, the method of determining their Ukrainian pension rights depends on the international and national pension rules applicable at the relevant time. If the Pension Fund applies an incorrect calculation mechanism or refuses to take into account the indicators required by Ukrainian legislation, its decision may be challenged before an administrative court.
